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Western Price Survey

July 10, 2015What Goes Up Must Come Down

Peak power prices in the Northwest, which had been supported by soaring temperatures, dropped steeply over the July 2-10 trading period.

California-Oregon Border average peak prices fell $37.15, to $30.05/MWh, while Mid-Columbia peak shed about $36 to $28.35/MWh. California hubs, by comparison, lost about $6 in the trading period, with both North of Path 15 and South of Path 15 finishing around $37/MWh.

Values for off-peak followed a similar trajectory, with Northwest hubs dropping about $13 to finish around $24/MWh (see chart).

Some areas in California, meanwhile, received a rare dose of July rain. Light rain was reported in San Francisco, and the eastern Sierra reported snow.

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The precipitation may foreshadow a wet winter. Ocean temperatures off the California coast are reportedly five degrees above normal for this time of year. Forecasters are saying there is growing evidence of a strong El Niño pattern in the Pacific, which could bring drought relief to the Golden State this winter.

Meanwhile, working gas in storage reached 2,668 Bcf as of July 3, according to U.S. Energy Information Administration estimates, a net increase of 91 Bcf from the previous week. Storage levels are now 32.8 percent greater than a year ago and 1.7 percent greater than the five-year average.

Production is returning to near-record levels, according to Enerfax, but demand is unable to absorb the high production.

Henry Hub gas spot values lost 10 cents in Wednesday-to-Wednesday trading to reach $2.72/MMBtu July 8. Western natural gas prices followed suit, falling between a penny and 29 cents by the end of the trading period. Southern California Border posted the greatest loss, down 29 cents to $2.77/MMBtu.

By the end of October, natural gas storage is forecast to reach 3,919 Bcf, according to the EIA's July 7 Short-Term Energy Outlook. This is 121 Bcf, or 3.2 percent, more than the five-year average for that period; it is also greater than the five-year average peak of 3,805 Bcf.

The agency expects natural gas spot prices to remain less than $3/MMBtu this month. The projected Henry Hub spot natural gas price averages are now $2.97/MMBtu in 2015 and $3.31/MMBtu in 2016
[Linda Dailey Paulson].

Archives of the Western Price Survey for the past year are also available online.

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